5 characteristics your business needs to recover from a crisis - february 3, consumer behavior report
What you’ll learn:
- Why brick & mortar might not be dead after all.
- 5 characteristics of businesses most likely to recover from a crisis.
Verde Consumer Behavior Report - February 3, 2021
Groundhog Day has never been as significant as it was this year. Punxsutawney Phil, apparently decreed six more weeks of winter. In the parched West, we say thank you and bring it on! (Sorry East Coasters, we know you need a break.) But let’s face it, no one - especially Bill Murray - can stomach the thought of reliving last year. We’re optimistic that’s not going to happen. But businesses still need to take some active steps (and some historical awareness) to successfully navigate forward.
Digitally-Native Deja Vu
If there’s anything we’re learning from pandemic shopping behavior it’s that ecommerce rules. So what’s the next step for digitally-native brands? Well, finding brick and mortar space in the ‘burbs, naturally.
We saw a similar experience during the massive retail reshuffling (some call it the retail apocalypse or resizing) that began in 2010. Now, mid-Pandemic with a hopeful end in sight, there is a second wave of DTC brands looking to open physical retail locations.
Retail Dive explores how digitally-native brands are seeing the pandemic-inspired commercial real estate glut as an opportunity. "There's a lot of discussion that retailers, including DTC brands, are going to be stepping on the accelerator in the middle to end of this year to focus on stores getting opened in 2022," Ben Lazzareschi, executive vice president of retail at JLL, said.
"We anticipate that they are going to be expanding at pre-pandemic levels." [For perspective, it’s worth noting that JLL is a commercial real estate company.]
What does it all mean? First, it’s a little too early to call this a trend. Second, there’s not exactly a mad rush to snap up floorspace. The underlying messages here are:
It is, has been, and will continue to be all about customer convenience and desires. As the pandemic rages on, that means products arrive at our doorstep. Post-pandemic, that may mean some return to the satisfaction of bringing home a product the same day you buy it.
It’s supply and demand. With 8,736 store closures in 2020 (down from 9,832 closures in 2019, incidentally), a high inventory of available space makes it a good time to buy or sign a lease.
It’s cost effective. DTC channels may increase margins in theory, but marketing costs can eat those potential profits. As the article states:
“The cost to acquire customers online eventually becomes prohibitively high. Casper's sales and marketing expenses reached $154.6 million in 2019, a 22.5% increase from the prior year. Chewy spent $426.9 million on advertising and marketing in 2019, up 8.6% from the previous year. And Wayfair's advertising expenses hit $1.1 billion in 2019, up 41.5% year over year.”
Physical retail stores remain valuable assets for brand-building, discoverability, and loyalty development. Tyler Higgins, leader of the retail practice at AArete, says in the article, “Brick-and-mortar stores hold just some unique value that is near impossible for them to gain just through kind of a digital footprint."
Developing a Resilient Business
In research on organizational resilience, Deloitte identified, “...five characteristics of resilient organizations that enable and promote nimble strategies, adaptive cultures, and the implementation and effective use of advanced technology.” What’s especially notable is that Deloitte interviewed and followed Chief Experience--aka Customer Experience--Officers (CXOs) for the research. In other words, organizational resiliency relies on how your consumers interact with your brand, as well as what goes on behind the curtain.
The five characteristics are:
Preparation: Active planning for both short- and long-term eventualities.
Adaptability: Interestingly, this is less focused on a nimble organization and more focused on employees. “Flexibility/adaptability was, by far, the workforce trait CXOs said was most critical to their organizations’ futures.”
Collaboration: Breaking down silos speeds decision-making, mitigates risks and increases innovation.
Trustworthiness: This applies to leadership and employees, internal and outgoing communications with key stakeholders, embodying genuine empathy. Bad news alert: Over 33% of the CXOs interviewed weren’t confident in their organization’s success in developing trust.
Responsibility: On the flip side, 87% of CXOs are confident they’re balancing all of their stakeholders’ needs and are responsive and adaptable to needs beyond pure profit.
It’s never too late to build these traits into your organization. But Deloitte says: do it quickly. Thinking ahead is an actual marker for success among those companies that recover from a crisis.
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